AAII Sentiment Survey Results For Frame Ended 12 August 2015
$SPY, $QQQ, $DIA, $OIL
The AAII Investor Sentiment Survey measures the percentage of individual investors who are Bullish, Bearish, and Neutral on the stock market for the next 6 months; individuals are polled from the ranks of the AAII membership weekly. Just 1 vote per member is accepted in each weekly voting frame.
Data represents what direction members feel the stock market will be in the next 6 months.
AAII Investor Sentiment Survey Update
This week’s results, as follows:
Bullish: 30.5%, + 6.1
Neutral: 33.4%, – 10.6
Bearish: 36.1%, + 4.5
Change from last week:
Bullish: +6.1
Neutral: -10.6
Bearish: +4.5
Long-Term Average:
Bullish: 38.78%
Neutral: 30.94%
Bearish: 30.29%
Commentary
Neutral sentiment dove to a 4-month low, as both optimism and pessimism rose in the latest AAII Sentiment Survey, Neutral sentiment matched a record set last year.
Bullish sentiment
Expectations that stock prices will rise over the next 6 months, rose 6.1% percentage points to 30.5%. The rise is not large enough to prevent optimism from being below its historical average of 39.0% for a 23rd week running, the longest such streak since a 29-wk stretch in Y 1993.
Neutral sentiment
Expectations that stock prices will remain unchanged over the next 6 months, fell 10.6 percentage points to 33.4%. This is the lowest Neutral sentiment has been since 2 April 2015 (32.6%). Even with the decline, Neutral sentiment is above its historical average of 31.0% for a 32nd week runnning. This ties the record for the longest streak of consecutive weeks with an above-average reading, which was set between January and August of Y 2014.
Bearish sentiment
Expectations that stock prices will fall over the next 6 months, rebounded by 4.5 percentage points to 36.1%. The rise keeps Pessimism above its historical average of 30.0% for the 3rd week running
This is only the 2nd time in about 2 years that Bearish sentiment has been above 30% for a period of 3 straight weeks. The last time it occurred was on 26 October 2014. Pessimism has largely been staying at low marks during this uncertain and volatile frame. During the past 2 years, the level of Pessimism registered by the AAII survey has averaged 26.5%. It is too early to say whether the recent happening of above-average Bearish sentiment (6 out of the past 10 weeks) is a sign of the pendulum swinging back the other way or if it is temporary in a longer-term trend.
Giving AAII members reasons for caution are concerns about the possibility of a sizable decline in stock prices occurring, the pace of economic growth, the lack of wage growth, valuations, the impact of the stronger dollar on earnings and geopolitical events.
The lack of market breadth and ongoing volatility are also playing their parts in here.
Keeping other AAII members optimistic is the Fed’s continuing accommodative monetary policy, the ongoing Bull market, some sustained economic expansion and earnings growth.
This week’s special question asked AAII members what they think about the new requirement for companies to disclose how CEO compensation compares to the median compensation for all employees, 50% of all respondents were in favor of the rule.
Many favor the increased level of transparency, saying stakeholders have a right to the information. Several others brought up the issue of excessive CEO compensation. About 4% of all respondents used the word “Great” to describe the new requirement.
Not everyone was in favor of the new rule, 26% are not in favor the new rule or think it’s a bad idea.
Common themes in their responses were that the rule amounts to government interference, it is unnecessary or it is politically motivated. An additional 13% of respondents said the rule will not lead to any significant changes in compensation.
By Charles Rotblut, CFA AAII
Paul Ebeling, Editor
HeffX-LTN
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